KOREAN GOVERNMENT TO CUT DRUG PRICES OF FOREIGN PHARMACEUTICALS
The Korean Ministry of Health and Welfare has announced that it will implement price cuts on drugs produced by foreign pharmaceutical companies. In addition to cutting drug prices, the government also cut the number of drugs that are covered by insurance, only covering those drugs that are cost-effective. The new drug price cut plan will be implemented in September 2006, although it is possible that implementation may be delayed.

Newly invented drugs are currently priced at the average of seven advanced countries under the public health insurance system, and there is no negotiation. Prices of newly invented drugs, which are mostly produced by foreign pharmaceutical companies, will now be negotiated in order to approve them as insurance-paid medicine. Negotiations will occur between the pharmaceutical company and the National Health Insurance Corporation.

The Korean government also plans to lower the prices of original drugs once domestic generic products are registered. In addition, it plans to exclude many drugs from the insurance-covered list that are of questionable therapeutic value. The public health insurance system currently pays for almost all medications, including those that may be unnecessary or ineffective. Foreign drug companies have criticized the new drug pricing plan, stating that many of their drugs are already underpriced in Korea.

CHINA TO ELIMINATE REDUNDANT TESTING AND CERTIFICATION FOR MEDICAL DEVICES
The Chinese government has agreed to take action to eliminate redundancy in testing and certification for medical devices imported into China. China agreed that it would eliminate all duplicative testing and certification requirements for medical devices by the end of May 2006. This pledge was made during the April meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT). The U.S. government has argued that these duplicative requirements served as a trade barrier, restricting foreign companies’ access to China’s medical device market.

The Chinese government’s efforts are a positive development for the U.S. medical device industry, which has maintained that the requirements are time-consuming and do not improve the safety of devices. It is hoped that the Chinese government’s reevaluation of these duplicative requirements will lead to a more streamlined product registration process for medical devices.

INDIA IMPLEMENTS NEW MAXIMUM RETAIL PRICE SYSTEM FOR DRUGS
The Indian government has issued an order to change the Drugs Prices Control Order (1995) that will change the new maximum retail price (MRP) for drugs. Pharmaceutical companies will now have to comply with the new MRP system as of July 2006—all drugs produced on or after July 1, 2006 will be affected. The new price system will take into account all taxes, and pharmaceutical companies will now be required to sell all drugs as per the MRP.

Currently, drugs are labeled as “retail price” with “local taxes extra.” Lack of uniformity in sales tax throughout various states has been a problem, and more and more states have begun to use value-added tax schemes. Consumers will benefit from the new system since it will eliminate miscalculation or payment of extra charges.

The Indian government has plans to allow a five-year exemption from price control for domestic new drug research and development. Product and process patents obtained through domestic research will also be eligible for exemption. Other initiatives include a proposal to lower excise duties to 8% in those states where it is 16% to level the playing field for drug manufacturers in different states.

In addition, the government has issued a directive suggesting that pharmaceutical companies begin printing drug labels in both English and Hindi to decrease the likelihood of patients to make mistakes when taking their medication.

U.S. INTERNATIONAL TRADE COMMISSION TO INVESTIGATE MEDICAL DEVICE MARKET IN JAPAN
The U.S. International Trade Commission will be conducting a fact-finding investigation into the competitive conditions in Japan and other foreign markets for medical devices and equipment. The investigation will focus on comparing the regulatory environment in Japan with those of other countries that are main markets for U.S.-manufactured medical devices.

The International Trade Commission will also analyze any bilateral and multilateral trade agreements that have previously addressed regulatory issues to look at the implication of these agreements for the U.S. medical device and equipment industry. Japan’s regulatory approval process for new medical devices is notoriously slow, and U.S. medical device companies have complained that Japanese regulations are too costly and burdensome.

The investigation was initiated at the request of the House Ways and Means Committee and will be completed by March 9, 2007. There will also be a public hearing held in July 2006. The medical device market in Japan was also mentioned in the United States Trade Representative's 2006 National Trade Estimate Report on Foreign Trade Barriers with regard to expanding market access.

NEW TECHNOLOGIES COMBAT COUNTERFEIT DRUGS IN ASIA
Counterfeit drugs are a big problem in Asia. Somewhat lax enforcement of drug patents and the high cost of brand name drugs have generated huge demand for (and supply of) cheap imitation drugs. In some Asian countries, up to one-half of available drugs are counterfeit. As a result, pharmaceutical companies and governments have begun to use more ingenious techniques to combat the flood of counterfeit drugs.

Some pharmaceutical companies, including GlaxoSmithkline, Merck, and Knoll Pharmaceuticals, have implemented the use of holograms on their drugs in order to differentiate them from counterfeit versions, and to make it more difficult to copy their drugs. The Malaysian Ministry of Health has also employed holograms as a security measure, requiring that all registered drugs be tagged with the Meditag, a hologram security device. Each Meditag has a unique serial number and can be scanned with a special device to verify its authenticity.

However, since it is possible to copy holograms, they do not necessarily pose a significant obstacle to companies that are intent on producing counterfeit drugs. An alternative authentication technique is radio frequency identification, or RFID. An RFID tag, which contains a chip with an antenna, is affixed to the drug packaging. The exact location of the drug can then be tracked over radio waves. This technology is not cheap, but is said to be one of the most effective methods developed so far to address the problem of counterfeit drugs. Both Purdue Pharma and Pfizer have already begun using RFID technology to track their respective drugs, OxyContin and Viagra.